How To Become A Successful Share Trader.
How Do I Become Successful Share trader?
Firstly there are a few things to look at before you start trading in the market. You need to ask yourself a few questions and be very honest in your answers.
1. Why do I want to trade in the share market?
2. How much capital do I have to invest?
3. How much can I afford to lose if things don’t go the way I’ve planned?
4. How much profit do I want to make? (Be realistic.)
5. What am I prepared to do to become successful?
6 How do I get the information that I need to get started?
7. Which broker shall I use? How much will I pay for their services?
8. How much time can I spare to be a share trade?
We shall now look at the above questions in a little more detail.
Why do I want to trade in the share market?
Usually it is to make money.But to be realistic this is a question that only you can answer. Again be honest with yourself.
How much capital do I have to invest?
That depends mainly on you and your financial commitments. But to be practical you would need at least around the $2,000 mark at minimum to start with.
One reason is brokerage .You will be paying around $50 depending on what your broker charges. That’s $25 for buying your shares and $25 for selling them. So that is 2.5% profit you have to make to break even. Therefore if you made 10% profit which equals $ 200.00 less $50.00 for brokerage, this will leave you a profit of $150.00 or 7.5% clear profit.(I haven’t allowed for capital gains tax in this.)
How much can I afford to lose if things do go the way I’ve planned?
Personally I would have a stop loss in place for around the 5% to 7%. (For more information on stop losses see past post called “stop losses”)
But this is an individual thing as to what you are comfortable with. Also this depends on how large the amount is that you have invested in the first place.
Another guideline that some traders use is no more than 2% of their total capital investment as a stop loss.
How much profit do I want to make?
A million I hear someone say. Now that is a nice round figure but there are a few things to take into consideration first. One is to realistically pick a time frame in which you intend to achieve your monetary goal. The amount you have to invest plays an important part as well. Because the smaller the stake you start with the longer it will take you to make your financial goal. So be realistic in your goals and expectations.
Because of financial constraints I had a personal goal to begin with of only achieving $100.00 a week profit. But over time I have built the original $500.00 portfolio to around $12,000 in around three years. I have continually added my profits back in. And I have had a few losses and minor setbacks along the way.
What am I prepared to do to become successful?
The first and most important is to study, study, and more study in fact you never stop learning. Allocate time to do this on a regular basis.
I have experienced the largest learning curve in my entire life since I became serious about becoming a share trader. And the biggest problem I have faced is “The person in the mirror” Myself! For I found that the emotions of “Fear and Greed” were the first things that I had to deal with. And they still trip me up from time to time.
The person in the mirror can be your biggest enemy or friend. You will find that your emotions, attitudes will govern how you trade and react to market conditions. I am not going to go into any details here as you will find past articles in this website which amply covers all these areas.
As I have stated before the amount of profit that you make is directly in proportion to the effort you put in.
How do I get the information that I need to get started?
Too easy! Well you have made a fantastic start by just reading this article plus al the others you will find in this web site alone. All you have to do is take the time to go through the different categories and pick out the ones that help you the most. And they are all free!
Plus there are plenty of books available to start you off on the right foot.
Which broker shall I use? How much will I pay for their services?
This will depend on what sort of services you require. Usually the more “bells and whistles” you want the dearer the broker. The one I use at the moment is E-TRADE. I am quite happy with the services that they provide as I have a preference for doing my OWN research so if I make a mistake then I have only myself to blame.But shop around it is cheaper usually if you use the internet.
How much time can I spare to share trade?
This depends on a couple of factors. One is the commitment you are willing to make plus the goals you want to achieve. But the rewards definitely reflect the amount of effort that you put in to it.Another is your work and family commitments.They also play a vital part to consider.before you start share trading.
But of most importance is that your life should not revolve around the stock market. You need a balance even when you have become a professional share trader.
Of course there are questions that I haven’t covered, but these are the basic ones that will help you to find your footing on the rocky road to financial freedom through share trading.
I wish you profitable trading.